"The incident has stained the reputation of Chinese toy manufacturers and made a large number toy factories in Guangdong lose a great deal of money, even though Mattel has apologised to China," Guangdong fair trade bureau director Chen Lipeng said in China Daily.
"A simple apology cannot compensate for our losses," he said. Chen is now in talks with American and Chinese lawyers on how to file a suit against Mattel in a US court.
If a Guangdong toy company wants to sue Mattel, the bureau will provide it legal assistance.
Hao Junbo, a lawyer with Beijing-based Lehman law firm, urged domestic toy manufacturers to file a complaint against Mattel in a US court because only by doing so they can redeem their losses.
But Chen said: "The plan is still under discussion because a lot of preparatory work has to be done if we really need to file charges against Mattel following US judicial procedures. I do not know when a real suit can be filed."
The cumulative amount of compensation will probably run into billions of dollars, said Chen Beiyuan, a senior lawyer in Guangzhou-based Bohao Law Firm.